What Is Lifetime Health Cover Loading? (LHC)

Canstar’s quick and easy guide to Lifetime Health Cover (LHC) loading and how to avoid it.

While Australia has a first-class public health system, it’s not entirely sustainable for the entire population to rely on it – meaning that the government maintains a number of incentives for individuals to move over to the private health care system. Less people relying on our public healthcare system equals better quality of service for those who do, along with lower costs for the government. So in order to try and encourage more people to purchase private health cover, Lifetime Health Cover was introduced. If you’re less than clear on what this really means, Canstar is here to explain Lifetime Health Cover, and how the ‘loading’ aspect of the initiative works.

Lifetime Health Cover Loading: A Summary

Australians have until the 1st of July after their 31st birthday to take out an adequate level of private health insurance (hospital cover)

If you don’t do so, for every year following this you will incur a 2% surcharge on your health insurance premiums for whenever you do take out hospital cover

This can add up to a total surcharge of 70% once you reach the age of 65, but does not increase further beyond this point

The LHC Loading surcharge is removed after one has held an adequate level of private health insurance for 10 consecutive years

What is Lifetime Health Cover Loading?

As with the Medicare Levy Surcharge and the Private Health Insurance Rebate, Lifetime Health Cover (LHC) is an initiative designed to encourage young people to take out health insurance and, in doing so, reduce the burden on the public health system. Lifetime Health Cover loading applies to anyone who does not take out private health insurance with at least Hospital Cover. Lifetime Health Cover loading applies a 2% increase in premiums per year for every year after your 30th birthday that you don’t take out private health insurance.

For example – a person who does not have health insurance and takes out hospital cover when they are 40 years of age will pay a premium loading of 20% (10 years multiplied by 2%). Provided they remain covered, that loading does not increase with age – it will stay at 20% until they turn 50, at which point they will have been covered for 10 consecutive years and their LHC loading will be removed.

To get you started we have provided a comparison table below that provides a snapshot into current policies available with links direct to the providers’ website. Please note that this table has been formulated based on a single male born in 1988 seeking hospital cover in NSW, sorted by Star Rating (highest first). Try this comparison tool out today here.

How much will Lifetime Health Cover cost me?

The price you will pay if you incur Lifetime Health Cover loading will depend on the original cost of your health insurance policy and the age at which you finally get around to applying for that health insurance policy.

Assuming an LHC loading of 20%, and using the average health insurance premiums for a single person with packaged cover (Hospital and Extras) that CANSTAR calculated for its most recent Health Insurance Star Ratings report, the potential annual cost for a single in delaying the purchase of health insurance could be as follows:

The ‘continuity’ benefit is transferable between funds and allowance is made for small gaps in cover. The maximum loading is 70% and that loading would apply to anyone who first takes out health insurance at age 65 or more. As previously mentioned, the loading is removed once a person has held private health insurance for 10 years.

Are there any exceptions?

There are exceptions or consideration for special circumstances which apply to the LHC rule:

A period of 1,094 days of leeway is provided over your lifetime to allow for:

How can I calculate my Lifetime Health Cover loading?

Calculating your LHC loading is reasonably straightforward – thanks to the power of the internet!

The government’s Private Health website has two excellent Lifetime Health Cover calculators: one to help people work out their LHC base day and current potential loading, and one to help people calculate when their 10 years of continuous cover benefit will kick in. You can access the health insurance calculators here.

But don’t just calculate how much LHC loading you’re paying – do something about it today.

Here’s why you should have health insurance – the benefits are many. Hospital Cover is available for you to get treated more quickly for illnesses or injuries not deemed a serious emergency, including elective surgeries such as a knee reconstruction or a C-section. Extras Cover is available to help cover the cost of medical and health help including glasses (optical), a trip to the dentist, physiotherapy, and more.

Of course, it has to be worth it for you to take out health insurance; you can’t just do it for cheaper premiums or a tax benefit. We can help you there. Compare over 800 policies on our website to find a great value policy that’s worth making the jump into private health insurance.

Compare Health Insurance

Related

Products displayed above that are not “Sponsored” are sorted as referenced in the introductory text to the table and then alphabetically by company. Canstar may receive a fee for referral of leads from these products. See How We Get Paid for further information. If you decide to apply for health insurance, you will deal directly with an insurance provider, and not with Canstar.

Consider the provider’s detailed product and pricing information before making a decision to purchase a policy. The products displayed on this page do not include all providers and may not compare all features relevant to you. View the Canstar Health Insurance Star Ratings Methodology and Report. The rating shown is only one factor to take into account when considering products.

The Star Ratings in this table were awarded in September 2018 and data is as at that date, updated from time to time to reflect product changes notified to us by product issuers.

Sponsored products are paid advertisements and do not include all providers. Canstar receives a fee for referring you to the advertiser. Canstar is not giving you advice in relation to sponsored products.

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you. Consider the product disclosure statement before making a purchase decision. Canstar provides an information service. It is not a credit provider, and in giving you information about credit products Canstar is not making any suggestion or recommendation to you about a particular credit product. Statistics referenced on this page have been verified by Canstar Research. Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917.